By Søren K. Poder, MA in history.

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1 Trust, brokerage of social capital and competitive strategies between town and country in the 18 th century. Analysis of regional socioeconomic networks 1755 to 1772 By Søren K. Poder, MA in history. This paper will analyze the mercantile, social and economic relations between individuals in a historical rural society characterized by considerably marked faults due to weak legal institutions. The paper shows that neither classic institutional nor recently commercialization models offers sufficient explanations of historical evidence. Secondly, it is argued that by not using available the spatial and social networks analysis deviations will remain social deviations. From relational data, extracted partly from three account books, kept by the Danish merchant Sillio Frich, from 1755 to 1772, and partly from a parish register from 1733 to 1744, the paper shows how this particular merchant, by turning his social network into an economic network and did reduce the substantial high transaction-specific-investments. And secondly, how Sillio, through his social network, and especially his so called weak ties, created a relative reliable competitive strategy. By taking the frequency, reel values of each transaction and the spatial distances as relational values, the paper analyses the density of the greater network, isolate dense subgroups and locate the most centralized individuals in the competitive strategy. In a broader perspective the paper proposes considerations how to understand, analyze support today s developing markets from a socioeconomic network perspective. Background Denmark, in the 18 th century, was a society in accelerating change. From the end of Great Nordic war (1725) to the outbreak of Napoleonic Wars (1801) the monarchy experienced continuously peace, due to its armed neutrality, sweeping socio-institutional reforms and economic growth, that by the of the century gained momentum. But what caused the transformation? What was there prime-mover? This debate is one of the historian s most persistent perpetuum mobile. 1 The different explanations, that have been proposed, are, broadly speaking, positioned at opposite ends on a continuum between traditional institutional history and the relative newer theories of commercialization. 2 That is commercialization first institutional reforms second. Traditional Danish historians argue that it was the government s reluctance to implement necessary agrarian reforms which, as it is argued, would have generated growth. Not until the implementation of the comprehensive land reforms in 1788 (at t 0 ), did the preserved medieval Danish society change into (at t 1 ) a modern commercialized society. 3 In so far the Danish marked towns are included, (Until the foundation The Danish Center of Urban history in 2001, urban history, was a marginal discipline in agricultural history), these are assumed strictly passive center of service - and as such without possibilities to generate social-economic development in their rural hinterland. 4 On the other hand have recent international empirical studies, in urban development and economic history demonstrated that, the commercial activity between provisional towns and the rural hinterland in the 18 th century was a far more complex interaction between legal, social and economic institutions then usually assumed. And that 1 Christensen 1996 p Poulsen Person Frandsen Degn 1998, 2001 Henningsen

2 the marked did play a very import role in the distribution of good and services well before the 18 th century. 5 Hence the institutional reforms were not cause, but results of a prolonged socio-economic development with numerous regional nuances. Theoretical frame Although both positions adds value knowledge to our understanding of the 18 th century neither one seems to offer a sufficient explanation of historical evidence. 6 One problem is, as Walter Powell among others argues, that both models, as well as the intermediate hybrids, fails to capture the two interconnected part of the, at the time, substantial high transaction-specific-investments. That is, the fixed cost of transportation and the costs of gathering information on prices, opportunities and not least the risk of losing money due to asymmetrical knowledge on a more or less opportunistic marked. 7 Secondly, both theories recognize that institutions both facilitated opportunities and, even more, created potential barriers. But, since institutions are assumed formal entities empirical diversions has to be explained as unexplainable social variables together with all other being equal. Hence, internalized mutual trust and unwritten social conventions has not been defined functional institutions - even though social networks have been proven crucial for social mobility. 8 Purpose Social networks have long been recognized as reliable media for exchange of knowledge and trust over long distance despite of regional (and rational) boundaries. Social networks are in other word able to bend spatial systems. And, as will be showed, did so in this particular case. Hence, in addition to the two traditional theories the purpose of this paper is analysis and demonstrate how a merchant in the 18 th century conducted a substantial part of his trade by internalize commerce in a social network held together by mutual commitment, social rules. And, as both the goal and a result, long term reduction of the transaction-specific-investments. 9 Scope of the paper The paper is divided into two parts. Firstly the merchant s trade interregional network is analyzed. It is argued that the trade between merchants was based on long term socio-economic relations between equals separated in space but with mutual interest in getting access to not directly accessible markets. For instance, for most marked towns on the east coast of Denmark the Baltic Sea represented by far the most important marked. While the west coast Marked Towns primarily had commerce with merchants in Amsterdam from where they acquired goods from the Mediterranean and the Far East The second part of the analysis will focus on the hinterland. The analysis shows that the nearest neighbor bios played a major role in the farmer s choice of Marked Town. Most customers did choose the nearest town when they 5 Christensen 2001, Hansen 1998, Epstein 2001 Mikkelsen 2001; Pacione 2005; Storper 1997; Hohenberg & Leeds Powell Pacione Grannovetter 9 Lin

3 had to buy things they could not produce (Figure 2). But on the other hand: Peasants also chose trade opportunities on the basis of common perceptual borders and the strength of connections to the local network. 4: Relational data for Social Network Analysis The relational data used is extracted from two very different sources. Firstly the merchants Sillio Frich from account books 1755 to Like his contemporary merchants Sillio had to keep detailed accounts of his customer s credit. Not only for legal reasons but simply because a customized system of bookkeeping was a simple necessity, given that credit was essential as a result of a shortage of money, fluctuation in prices and significant long-term variations in production surplus In totals the account books contains the names of 728 individuals and their 9932 transactions. All customs has been registered in a SQL database and geotagged according to village that Sillio refers to. Sillio account books are significant in the sense that they revile a merchant s competitive strategy. Sillio most important article was unprocessed flax which he, as seen in figure 1, distributed to the entire region. Among his costumers were three individuals particular important. The paper will show that these were old friends who all had ties to each other and to the parish (Sonder Omme) where Sillio was born and grew up. To analysis the social structure and trust that Sillio capitalized the second source used in the analysis is the parish registers from the parish Sonder Omme from The parish where Sillio was born in From the registers relational data is generated by a complete registration of all 150 christening ceremonies that are recorded from Hence, the social network that will be analyzed consists of 527 actors and 887 unique relations (figure 2 and 3). The data is thereafter linked to the data from the account books to show Sillios relations to the outer parishes in the region 10 Feldbæk Boje

4 Appendix Figure 1 Sillio s distribution of flax Notice that Sillio sold significant quantities of flax in the inner parishes and surprisingly large quantities to outer parish Grindsted. Blue lines represents social ties between Sillio s most important business partners.. Figure 2: paternity relations in Sdr. Omme

5 Figure 3: Spatial distribution of paternity relations in Sdr. Omme

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